Comments on: Setting Up a Covered Call Trade by First Selling an Out-Of-The-Money Put https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/ Learn how to invest by selling stock options. Fri, 02 Jun 2017 18:57:07 +0000 hourly 1 By: Geoff https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/#comment-109081 Fri, 02 Jun 2017 18:57:07 +0000 http://www.thebluecollarinvestor.com/?p=15460#comment-109081 In reply to Justin P..

Thank you for the head’s up, Justin. I see that on the Finviz website. I can’t confirm anything with other sites which have information ranging from June 15th to July 21st for the anticipated ER date. I haven’t been able to find any historical data but the chart indicates that the last ER may have been March 8th which would be a good indicator that your information may very well be correct.

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By: Geoff https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/#comment-109079 Fri, 02 Jun 2017 18:13:23 +0000 http://www.thebluecollarinvestor.com/?p=15460#comment-109079 SINA Special Dividend goes ex-Div on Monday. The new contract will be for 100 shares of SINA and 10 shares of WB deliverable at expiration.

Liquidity may become an issue. Today is the last trading day before the ex-date so evaluate your exposure and risk tolerance for the special dividend and the potential for reduced liquidity.

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By: Alan Ellman https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/#comment-109066 Fri, 02 Jun 2017 11:21:36 +0000 http://www.thebluecollarinvestor.com/?p=15460#comment-109066 Rob,

Welcome to the BCI community.

Here is an example taken from pages 141 – 143 of my book, “Selling Cash-Secured Puts”

Stock price = $51
Sell $50 put for $1.50
Cash to secure put = $4850
Initial return = $150/$4850 = 3.1%
Share price accelerates to $57 in first half of contract
Put value declines to $0.30 (20% of original premium)
Buy back $50 put retaining 80% of original value
Use the now freed up cash to secure another put and generate a 2nd income stream in the same contract month with the same cash

I refer to this as the “20/10% guidelines” for puts.

There are also guidelines to buy back puts when share price declines.

Alan

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By: Rob https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/#comment-109065 Fri, 02 Jun 2017 07:12:26 +0000 http://www.thebluecollarinvestor.com/?p=15460#comment-109065 Alan,

I am a new to options and cash secured puts are fascinating to me. Your videos have been amazing and I hope to learn more from you. I have purchased your book on .stock investing for students and I hope to read it soon .

One thing i am confused about is closing position mid contracts and buying back puts when it comes to cash secured puts. I was wondering if you could explain that with an example.

Thank you so much.

Rob

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By: Justin P. https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/#comment-109023 Fri, 02 Jun 2017 02:56:28 +0000 http://www.thebluecollarinvestor.com/?p=15460#comment-109023 In reply to Alan Ellman.

Re FIZZ there appears to be an ER on June 8 as well.

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By: Alan Ellman https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/#comment-108972 Thu, 01 Jun 2017 20:31:21 +0000 http://www.thebluecollarinvestor.com/?p=15460#comment-108972 FIZZ: 1-Time special dividend:

Thanks to Geoff for sending this email:

Greetings Gentlemen:

If it’s helpful, I’m just making you aware of a special dividend of $1.50 being paid by FIZZ that went ex-dividend today (06/01). I sold a $95 call yesterday and when I checked my account today it showed the position as -1 $93.50 Jun 16 17 Call. I was kind of confused and wondered if I “fat-fingered” the trade yesterday. I checked the actual trade confirmation which showed that I did sell the $95 strike.

After much searching and not finding any news, I did find a special dividend notice on Seeking Alpha which didn’t appear or I couldn’t find on NASDAQ or anywhere else that I searched.

In any case, in the event you get some confused emails this may shortcut your work.

Thanks for all your great efforts!

Geoff

Check out this article I previously published on this topic:

https://www.thebluecollarinvestor.com/special-1-time-cash-dividends-and-our-covered-call-positions/

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/setting-up-a-covered-call-trade-by-first-selling-an-out-of-the-money-put/#comment-108864 Wed, 31 May 2017 21:27:25 +0000 http://www.thebluecollarinvestor.com/?p=15460#comment-108864 Premium members:

This week’s 8-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site. The report also lists Top-performing ETFs with Weekly options as well as the implied volatility of all eligible candidates. For your convenience, here is the link to login to the premium site:

http://www.thebluecollarinvestor.com/member/login.php

NOT A PREMIUM MEMBER? Check out this link:

http://www.thebluecollarinvestor.com/membership.shtml

Alan and the BCI team

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